Imagine ordering a delicious cheeseburger and fries to your door, only to find out it didn’t come with ketchup. What are you going to dip those fries in?! Disaster…
This scenario could become increasingly more common as the US finds itself in the midst of a ketchup shortage. The supply of prepacked ketchup sachets simply cannot catchup with the surging demand… demand fueled by a huge increase in takeout food orders in the last year.
With restaurants and bars closed for much of the last year, there has been a surge in demand for the home delivery of freshly cooked meals. This has had the knock-on effect of significantly increasing the demand for complementary goods such as condiments, the most popular of which is ketchup.
The increase in demand has resulted in a 13% increase in prices, with manufacturers trying desperately to increase production and meet the rising demand. This is great news for companies like Kraft Hertz who dominate the US ketchup market with over 70% market share. It is also allowing smaller manufacturers to take a slice of the pie though as even Kraft Hertz are struggling to ramp up supply.
Consumers can be picky though when it comes to their condiments, and many are expressing dissatisfaction when they receive an order with unbranded or unknown ketchup sachets.
THINK LIKE AN ECONOMIST!
Q1. What is meant by the term shortage?
Q2. Using a supply and demand diagram, show the impact of the increase in demand on equilibrium price and quantity.
Q3. Analyse the impact of Covid-19 on the demand for ketchup.
Q4. What other goods do you think have also experienced an increase in demand during the last year. Explain why.
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